WEB DESK: Oil prices slipped again on Tuesday, continuing their decline for a third consecutive session, as plans by OPEC and its allies to increase production outweighed optimism over a possible trade deal between the United States and China.
By early morning trade, Brent crude futures were down 4 cents at $65.58 a barrel, while US West Texas Intermediate (WTI) crude edged 9 cents lower to $61.22.
According to market analysts at ANZ, traders are weighing progress in the US-China trade talks against concerns about rising supply levels.
OPEC+ weighs modest production boost
Industry sources say OPEC+, a coalition of the Organisation of the Petroleum Exporting Countries and its partners, including Russia, is considering another small output hike in December. The group has gradually been reversing production cuts introduced over the past few years to stabilise prices after the pandemic hit global demand.
If confirmed, the move would add to market pressures that have kept prices from climbing further despite a relatively strong demand outlook heading into winter.
Hopes rise for US-China trade breakthrough
Providing some support to prices is renewed hope for progress in trade negotiations between Washington and Beijing, the world’s two biggest oil consumers. US President Joe Biden and Chinese President Xi Jinping are scheduled to meet on Thursday in South Korea, where discussions could pave the way for improved economic ties.
China’s Foreign Minister Wang Yi told US Secretary of State Marco Rubio in a phone call on Monday that Beijing hoped both countries could “meet halfway” to prepare for more high-level engagement.
A potential trade deal is viewed by analysts as a key factor that could boost global energy demand if it helps ease tensions and supports economic growth.
Sanctions on Russian oil companies add uncertainty
Last week, Brent and WTI recorded their strongest weekly gains since June, after the US imposed new sanctions on Russia over its war in Ukraine. The sanctions targeted two major Russian oil producers, Lukoil and Rosneft, marking the first such move by Washington during President Biden’s second term.
In response, Lukoil announced plans to sell its international assets, signalling the most significant shift yet by a Russian company under Western pressure since the conflict began in February 2022.
“The market was caught off guard by the sanctions against Rosneft and Lukoil, which together account for nearly half of Russia’s crude exports,” ANZ noted. “But even with these restrictions, worries about oversupply continue to weigh on sentiment.”
While traders remain hopeful that geopolitical developments and trade negotiations could offer some support, growing signals of higher OPEC+ output are keeping oil markets under pressure for now.